Singapore’s factory activity expanded for a fourth straight month in December, with the Purchasing Managers’ Index (PMI) coming in at 50.6 last month, an increase of 0.4 points from November.

According to data from the Singapore Institute of Purchasing and Materials Management (SIPMM) released on Tuesday (Jan 3), the expansion was attributed to a faster rate of expansion in factory output, inventory holding, as well as new orders and new exports.

The readings also indicate that “the overall manufacturing sector has moderated,” said SIPMM, adding that the latest data shows “resilience of the manufacturing sector in spite of the uncertainties in the global economy”.

A reading above 50 means the manufacturing economy is expanding, while a reading below that indicates a contraction.

A corresponding index for the electronics sector also posted an expansion, with the PMI for December standing at 51.2, an increase of 0.7 points from the previous month.

For the growth in Singapore’s manufacturing to be sustained, there must be stronger demand from global economies, said Mr Vishnu Varathan, senior economist at Mizuho Bank. “Manufacturing is about breaking even, picking up slightly, but the bottomline is it remains very tentative and how global relations play out with the feedback into global demand. We remember that overall exports demand has remained suppressed,” he explained.

China’s manufacturing sector, for example, expanded for a fifth straight month in December, but growth slowed a touch more than expected due to persistent weakness in exports.

Until there is noticeable improvement in demand, “it will be difficult to suggest that the manufacturing sector globally is set for an imminent rebound,” said Mr Varathan.

Source: Channel News Asia

3 January 2017